Losing The Bid: Philadelphia Newspapers Sale Dispute

Law360, New York (August 30, 2010, 4:15 PM EDT) -- On March 22 secured creditors lost an important right they assumed they had in their quiver of remedies to maximize their recovery against debtors in Chapter 11 bankruptcies.

The important right is a process known as “credit bidding,” which allows a secured creditor to bid the entire face amount of its claim against a debtor, including the unsecured deficiency portion, rather than cash or other currency at a sale of the debtor’s assets.

The secured creditor’s right to credit bid is found in Section 363(k) of...
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